At Palm State Mortgage, we know new house hunters can be confused by conflicting predictions about changes in interest rates.
Interest: A Mini-Review
Welcome to Your Castle!
By definition, “the interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.” Even the most inexperienced house hunter knows that since 2010, interest rates have fallen.
It’s economic history.
They stopped sinking at 3.66% in 2012, and now, in 2016, the annual average is hovering around 3.85.
Naturally, we advise you to re-evaluate the rate predictions before you lock in your mortgage. However, to see the big picture of any financial deal, you must look at more:
1.Predictions and Strong Personal Finance Strategy: If you are as house hunter, and especially a first-time house hunter, do your homework. Look at the predictions in your market area. Meg Bartelt, MSFP and founder of Flow Financial Planning, stated, “It can help us think through what we might do if the interest rates go up, down, or sideways,” She added, “This makes our plan stronger and more resilient.”
Good financial planning encourages us to take action on the things we can control and to make sure our plan can survive whatever happens that we cannot control.”
There is no doubt about it: Interest rates and the reaction of the market,” will be influencing your lives in any home you mortgage now, so what are the wise predictions for the year ahead?
2. Study The Trending Predictions:
it seems doubtful that the rates will grow quickly–or drop quickly– at the current time. “Reasons for this opinion include Bartelt’s observation that “there is disinflation and deflation in many parts of the world, many developed countries have negative interest rates, and the U.S., being the world’s reserve currency, is in no position to raise rates dramatically.”
Likewise, Kirk Chisholm of Innovative Advisory Group, points out that there is not much wiggle room to raise positive interest rates. “It is highly improbable that 10-year Treasury interest rates will rise above 3% in the near future.”
Joseph Hogue also agrees that interest rates aren’t rising anytime soon. “There is more than $13 trillion in sovereign bonds globally with negative yields, a little over a third of the market.”
He predicts, “The Fed can change short-term rates through the federal funds rate. But the long end of the yield curve — which affects long-dated debt like mortgages — will stay low for a very long time.”
3. Interest Rates Should Not Be the Only Deciding Factor in Pursuing a Loan
At Palm State Mortgage Company, we advise clients to avoid judging a home mortgage based only on the interest rates. Likewise, Erik Klumpp, CFP and founder of Chessie Advisors states, “Even if rates were to increase 0.25% or 0.50%, we’re still at or near historically low mortgage rates.”
He also encourages buyers at this time, even if interest rates rise slightly.
“For someone looking to purchase a home for the long-term, it’s a terrific time to buy.”
Interest Rates: Not the Only Yardstick for Your Home Financing Decision!
Palm State suggests you measure a home mortgage situation from several angles instead of only considering the one feature..
Palm State Mortgage and a good interest rate helped us finance our house!
Some of the other factors concerning the home mortgage “deal” you might make include:
A. The Down Payment: Have you saved up enough money for a good down payment?
B. Pay Per Month: Are you certain you can handle the monthly commitments of a homeowner?
C. Your Locale: Will you be staying in the home for at least five years?
Yes, you can play with mortgage calculations, and find many Internet calculators to help you. However, do not feel cornered by today’s interest rates. You might still get a good deal if you waited a few months. So, look at a few other basic factors besides the interest rate. :
D. Can you afford the ongoing maintenance costs?
E. Can you budget extra furniture or appliances and monthly household items?
F. Have you investigated the possible tax situation in regard to the property you have chosen?
G. Can you afford your homeowners insurance?
Interest Rates: Regard Them but Do Not Obsess over Them!
At Palm State Mortgage Company, we advise our clients against a near-sited approach. Look at the entire “Big Picture,” any loan deal. After careful investigation, we can help you so that you are the one who figures out if this is truly the right time for you to finance a home.
